FNMA and FMCC preferreds. In search of the elusive 10 bagger.

[orthopa]

watt suggested 2-3pct capital requirements to get out of conservatorship.  he also hesitated when asked if mnuchin was against a capital buffer.  both of these seem somewhat good news.

 

Agree, I think campuano was referencing how Mnuching expects the div and Watt was referencing building capital as a seperate topic.

[rros]

watt suggested 2-3pct capital requirements to get out of conservatorship.  he also hesitated when asked if mnuchin was against a capital buffer.  both of these seem somewhat good news.

 

Agree, I think campuano was referencing how Mnuching expects the div and Watt was referencing building capital as a seperate topic.

2-3% of 5 trillion. About 100-150 bill. Plus the 258 bill from the commitment would be 350-400 bill of backing.

[SnarkyPuppy]

Not sure how you can be comfortable that a rational decision will be made after watching that circus of irrationally incentivized, morally hazardous, willfully incompetent group of legislators are at the helm. 

 

Counter argument is that there cannot be any movement forward given gross incompetence and inability to understand basic tenants of mortgage finance, and that will allow Mnuchin to administratively move forward.  But these clowns are going to put up a very strong fight. 

[rros]

Not sure how you can be comfortable that a rational decision will be made after watching that circus of irrationally incentivized, morally hazardous, willfully incompetent group of legislators are at the helm. 

 

Counter argument is that there cannot be any movement forward given gross incompetence and inability to understand basic tenants of mortgage finance, and that will allow Mnuchin to administratively move forward.  But these clowns are going to put up a very strong fight.

My view is that Mnuchin/Watt will jumpstart the process with the creation of a buffer. Perhaps, a recap in disguise. Unless it is Corkerized  with strings attached. Whatever shape this buffer takes will speak volumes. This, may or may not act as a push for legislative reform. If it does, reform may fall in line with the buffer tactic. If it doesn't, the buffer may prove to be just the initial step of a wider Mnuchin/Watt move. Meanwhile, and as time passes, Corker gets closer to the exit door.

[SnarkyPuppy]

Not sure how you can be comfortable that a rational decision will be made after watching that circus of irrationally incentivized, morally hazardous, willfully incompetent group of legislators are at the helm. 

 

Counter argument is that there cannot be any movement forward given gross incompetence and inability to understand basic tenants of mortgage finance, and that will allow Mnuchin to administratively move forward.  But these clowns are going to put up a very strong fight.

My view is that Mnuchin/Watt will jumpstart the process with the creation of a buffer. Perhaps, a recap in disguise. Unless it is Corkerized  with strings attached. Whatever shape this buffer takes will speak volumes. This, may or may not act as a push for legislative reform. If it does, reform may fall in line with the buffer tactic. If it doesn't, the buffer may prove to be just the initial step of a wider Mnuchin/Watt move. Meanwhile, and as time passes, Corker gets closer to the exit door.

 

Watt has explicitly wrote multiple times that a buffer would not be a step towards recap/release.  How do you balance that against the requirement for Watt to sign off on an administrative recap/release?

[investorG]

Not sure how you can be comfortable that a rational decision will be made after watching that circus of irrationally incentivized, morally hazardous, willfully incompetent group of legislators are at the helm. 

 

Counter argument is that there cannot be any movement forward given gross incompetence and inability to understand basic tenants of mortgage finance, and that will allow Mnuchin to administratively move forward.  But these clowns are going to put up a very strong fight.

My view is that Mnuchin/Watt will jumpstart the process with the creation of a buffer. Perhaps, a recap in disguise. Unless it is Corkerized  with strings attached. Whatever shape this buffer takes will speak volumes. This, may or may not act as a push for legislative reform. If it does, reform may fall in line with the buffer tactic. If it doesn't, the buffer may prove to be just the initial step of a wider Mnuchin/Watt move. Meanwhile, and as time passes, Corker gets closer to the exit door.

 

Watt has explicitly wrote multiple times that a buffer would not be a step towards recap/release.  How do you balance that against the requirement for Watt to sign off on an administrative recap/release?

 

I believe watt has been told by mnuchin to leave recommendations on housing reform to Tsy;  after all, mnuchin's told us he's the expert.  that's likely why watt muzzles his inner support for the GSEs and hides behind the FHFA neutrality, even when Senators and Congressmen berate him for doing so.  the problem is that today's hearing showed an outrageously diverse set of goals, making legislative reform nearly impossible -- but mnuchin is going to try, which pushes out the timing.  there's a chance mnuchin waits for 2019 to see if congress switches to Democratic control, which could make things easier for him. I guess in the mean time we'll have to wait for mnuchin / phillips' principles, likely in early 2018.  overall, even with timing delay, the securities prices' represent great value imo.

[orthopa]

http://www.realclearmarkets.com/articles/2017/10/04/a_practical_fix_for_fannie_mae_and_freddie_mac_is_finally_within_reach_102903.html

[undervalued]

http://www.realclearmarkets.com/articles/2017/10/04/a_practical_fix_for_fannie_mae_and_freddie_mac_is_finally_within_reach_102903.html

 

I suppose this is an article for tomorrow, the 4th?

[SnarkyPuppy]

"Trump says Puerto Rico's debt will have to be wiped out"

 

Does Paulson not own PR bonds?

[investorG]

after the 'moron' comment, i'm guessing corker might end up as scty of state.

[investorG]

there has been an onslaught of supply across the preferred lists recently, someone big is moving on.

[investorG]

I can see Watt getting fired over this and finally call it an end to his politics with GSE's.

 

https://www.bloomberg.com/news/articles/2017-10-03/fannie-freddie-regulator-used-u-s-resources-on-personal-travel

 

possible but doubtful.  you're likely stuck with him.

[Luke 532]

https://www.insidemortgagefinance.com/imfnews/1_1205/daily/mel-watt-of-fhfa-can-act-alone-in-gse-zero-capital-1000043116-1.html#Login

October 4, 2017

Short Takes: FHFA’s Watt Tells Panel He Can Go It Alone / A Deal (Eventually) with Treasury’s Mnuchin?

 

By Carisa Chappell and Paul Muolo

 

cchappell@imfpubs.com, pmuolo@imfpubs.com

 

Although Federal Housing Finance Agency Director Mel Watt told a House panel Tuesday that he’s talking to the Treasury Department about the GSE zero capital issue, he also made it clear that he doesn’t need the agency’s approval to rectify the matter. “We are working with the secretary of Treasury now to resolve that issue,” he testified. In response to a question, he noted: “I could do it by myself, but I don’t think that’s the best way to do it…”

 

A handful of GSE watchers we spoke to believe that in time Watt will work out a compromise with Treasury Secretary Steven Mnuchin on zero capital.

[rros]

after the 'moron' comment, i'm guessing corker might end up as scty of state.

Why would Trump replace someone who said he is a 'moron' with someone who thinks he is a 'moron'? Trump demands absolute loyalty. Corker is out of favor.

[investorG]

after the 'moron' comment, i'm guessing corker might end up as scty of state.

Why would Trump replace someone who said he is a 'moron' with someone who thinks he is a 'moron'? Trump demands absolute loyalty. Corker is out of favor.

 

time will tell.  I think trump actually likes corker.  tillerson won't likely leave right now but the damage is likely done and so i'd expect a transition in early 2018.

[investorG]

https://www.insidemortgagefinance.com/imfnews/1_1205/daily/mel-watt-of-fhfa-can-act-alone-in-gse-zero-capital-1000043116-1.html#Login

October 4, 2017

Short Takes: FHFA’s Watt Tells Panel He Can Go It Alone / A Deal (Eventually) with Treasury’s Mnuchin?

 

By Carisa Chappell and Paul Muolo

 

cchappell@imfpubs.com, pmuolo@imfpubs.com

 

Although Federal Housing Finance Agency Director Mel Watt told a House panel Tuesday that he’s talking to the Treasury Department about the GSE zero capital issue, he also made it clear that he doesn’t need the agency’s approval to rectify the matter. “We are working with the secretary of Treasury now to resolve that issue,” he testified. In response to a question, he noted: “I could do it by myself, but I don’t think that’s the best way to do it…”

 

A handful of GSE watchers we spoke to believe that in time Watt will work out a compromise with Treasury Secretary Steven Mnuchin on zero capital.

 

if I remember correctly, the key thing that has now changed -- and likely one reason why watt did the sweep this q -- is finally fnma has caught up to fmcc and it can be said that all $$ has been repaid including interest under the original 10pct deal, pre-sweep. to me that gives much more flexibility in a potential 4th amendment.

[Luke 532]

if I remember correctly, the key thing that has now changed -- and likely one reason why watt did the sweep this q -- is finally fnma has caught up to fmcc and it can be said that all $$ has been repaid including interest under the original 10pct deal, pre-sweep. to me that gives much more flexibility in a potential 4th amendment.

 

+1

[rros]

If we are stuck with Watt, we are stuck with NWS and Conservatorship until he retires.

 

I can see Watt getting fired over this and finally call it an end to his politics with GSE's.

 

https://www.bloomberg.com/news/articles/2017-10-03/fannie-freddie-regulator-used-u-s-resources-on-personal-travel

 

possible but doubtful.  you're likely stuck with him.

Depends on the new terms for the buffer. A 5 to 10 bill buffer that is permanent and has no strings and is not renamed to something fanciful or placed in special accounts will be a positive. It will represent an incipient recapitalization no matter how they try to represent it. Just because it will be permanent capital sitting in a capital account. Anything other than this, could be very negative. Say, a buffer that resets (starts at 10 bill and erodes every year like it has been happening with the 3rd amendment and replenishes after a certain threshold. Or a buffer that sits on a specially created account or a buffer that can only be used under specific, narrow circumstances).

 

Briefly, a clean buffer of a good size would put us in the right direction, end of the conservatorship, and make Mnuchin more believable re his view of getting the companies out of government control. It will also be in line with Watt's recent comments that no company can be safely operated without capital.

[investorG]

If we are stuck with Watt, we are stuck with NWS and Conservatorship until he retires.

 

I can see Watt getting fired over this and finally call it an end to his politics with GSE's.

 

https://www.bloomberg.com/news/articles/2017-10-03/fannie-freddie-regulator-used-u-s-resources-on-personal-travel

 

possible but doubtful.  you're likely stuck with him.

 

while watt knows far more than you and me about the GSEs, mnuchin knows 10x more and almost certainly will be the driver -- watt is most likely along for whatever ride, just like always.

[investorG]

If we are stuck with Watt, we are stuck with NWS and Conservatorship until he retires.

 

I can see Watt getting fired over this and finally call it an end to his politics with GSE's.

 

https://www.bloomberg.com/news/articles/2017-10-03/fannie-freddie-regulator-used-u-s-resources-on-personal-travel

 

possible but doubtful.  you're likely stuck with him.

Depends on the new terms for the buffer. A 5 to 10 bill buffer that is permanent and has no strings and is not renamed to something fanciful or placed in special accounts will be a positive. It will represent an incipient recapitalization no matter how they try to represent it. Just because it will be permanent capital sitting in a capital account. Anything other than this, could be very negative. Say, a buffer that resets (starts at 10 bill and erodes every year like it has been happening with the 3rd amendment and replenishes after a certain threshold. Or a buffer that sits on a specially created account or a buffer that can only be used under specific, narrow circumstances).

 

Briefly, a clean buffer of a good size would put us in the right direction, end of the conservatorship, and make Mnuchin more believable re his view of getting the companies out of government control. It will also be in line with Watt's recent comments that no company can be safely operated without capital.

 

a 'buffer' would have a hundred caveats.  i'd rather skip the 'buffer' and move to the main course, a 4th amendment, some time in 2018.  in the mean time a move to annual rather than quarterly dividends would be thoughtful.

[Midas79]

Another 750,000 shares of FMCKM posted just now, half at $5.30 and half at $5.33. Still just this one series with abnormal volume as far as I can tell.

 

That's 8.75M in volume over the last week or so. Last I checked, Fairholme owned around 5.75M shares in that series so this volume isn't all them.

 

Someone said earlier that Tilson might be unloading but I can't find his series and share counts anywhere.

[rros]

I read Sweeney just granted Motion to Compel. What does that mean? Take a peek? Hope Sessions's team does not object and delay. That is the least they can do is to not put roadblocks if they can't help.

Thanks.

 

**SEALED** OPINION and ORDER granting 384 Motion to Compel. The parties' joint status report with proposed redactions is due by no later than November 3, 2017. Signed by Judge Margaret M. Sweeney. (sp) (Entered: 10/04/2017)

 

 

 

MOTION 384

---------------

**SEALED**Second MOTION to Compel , filed by All Plaintiffs.Response due by 8/17/2017. (Attachments: # 1 Appendix)(Cooper, Charles) (Entered: 08/03/2017)

 

From wikipedia (sorry). "Motions to compel are frequently used to settle discovery disputes, especially when one party refuses to turn over its answers to interrogatories, documents or other items asked for in a request for production of documents, or its responses to a request for admissions."

[Luke 532]

I read Sweeney just granted Motion to Compel. What does that mean? Take a peek? Hope Sessions's team does not object and delay. That is the least they can do is to not put roadblocks if they can't help.

Thanks.

 

**SEALED** OPINION and ORDER granting 384 Motion to Compel. The parties' joint status report with proposed redactions is due by no later than November 3, 2017. Signed by Judge Margaret M. Sweeney. (sp) (Entered: 10/04/2017)

 

 

 

MOTION 384

---------------

**SEALED**Second MOTION to Compel , filed by All Plaintiffs.Response due by 8/17/2017. (Attachments: # 1 Appendix)(Cooper, Charles) (Entered: 08/03/2017)

 

From wikipedia (sorry). "Motions to compel are frequently used to settle discovery disputes, especially when one party refuses to turn over its answers to interrogatories, documents or other items asked for in a request for production of documents, or its responses to a request for admissions."

 

Tim Howard comments attached...

[rros]

Looks like everything is well choreographed.

 

- Payments made in full

- Divided of 10% made in full

- All docs will be released by Dec end showing FHFA was not acting independently and thus the whole PSPA is null and void from the beginning. Warrants null and void too.

-Corker's Jan 1, 2018 date is met (or would not matter if PSPA are null and void by then)

- Watt will be hiding as docs will show the loot

On a more realistic level, how about Mnuchin simply declares the Sr. shares extinct as the funds have been repaid. Then, institutes a commitment fee for the remaining 258 billion and going forward all Fannie and Freddie have to pay is that fee for that commitment, a fee for that taxpayer support?

 

This will set the course for a Moelis/admin restructuring, be inline with the SPSPAs and continue to reward taxpayers for their support.

[Guest cherzeca]

@rros

 

This has been my playbook all along. Seems to me the loan +10% IRR has been paid now. Congress’s jumpstart so-called exclusive period to end in 3 months. We shall see.